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Australian Dollar Pound 2016 Exchange Rate Edges Higher on Weak Sterling

Pound Sterling Exchange Rates

The Australian Dollar Pound 2016 exchange rate has trended relatively narrowly this week on a mix of poor iron ore prices and weak Pound demand. Overall, AUD GBP has climbed slightly since markets opened on Monday.

Australian Dollar (AUD) Held Back by Poor Iron Ore Performance

Demand for the Australian Dollar has been generally poor since last week’s Federal Reserve announcements, which included a hawkish 2017 interest rate outlook for the US.

This dampened hopes that the Australian Dollar would continue to yield as highly as it has in recent years, with most analysts now expecting smaller AUD USD spreads.

While risk appetite has increased this week due to the US Dollar being sold from its highs, the Australian Dollar in particular has been held back by factors such as lower iron ore prices.

Demand for iron ore, Australia’s biggest commodity export, dropped on Wednesday as heavy smog in northern China curbed construction. This halted the inflow of iron ore, which led to lower prices.

Pound (GBP) Sold as Public Borrowing Figures Disappoint

As the holiday period approaches, movement in Pound exchange rates was inevitably going to become limper.

Demand for Sterling throughout the foreign exchange market has been low this week simply due to a lack of new supportive factors for GBP trade.

With forecasters bearish on the UK economy and the Pound throughout 2017 and the uncertainty in the UK government’s stance on the EU single market, investors lacked a real reason to pile into Sterling.

Sterling appeal worsened on Wednesday following the publication of the UK November public sector net borrowing results, which came in worse than expected at 12.2b and brought Britain’s national debt to a new record high.

Australian Dollar Pound 2016 Exchange Rate Forecast to Continue Rising

Australian Dollar Pound 2016 exchange rate movement is likely to continue to be limited in the coming days as the holiday period draws ever closer. Markets will become increasingly quiet and the most of the week’s influential data has already been published.

Australian Dollar trade in particular will likely not be influenced by domestic data again until 2017, with all of the 2016’s influential Australian economic publications now out.

Instead, demand for the ‘Aussie’ will be influenced by shifts in risk-sentiment and iron ore prices. If prices of iron ore continue to perform poorly, AUD will likely not be able to capitalise on the Pound’s weakness this week.

Sterling is likely to see poor performance this week overall due to the week’s underwhelming borrowing stats and a bearish 2017 outlook for the UK economy. It may see new support at the end of the week if Britain’s final Q3 growth results impress, however.

Australian Dollar Pound Interbank Rate

At the time of writing, the Australian Dollar Pound 2016 exchange rate trended in the region of 0.58, while the Pound Australian Dollar exchange rate traded at around 1.70.